In Thailand, business entities such as Registered Partnerships, Limited Partnerships, Limited Companies, Associations, and Foundations are governed by specific laws that outline the rights and obligations of investors and managers. Common responsibilities include operating the business according to its stated objectives, distributing dividends upon achieving financial targets, and holding annual or extraordinary meetings to discuss and advance business goals.
Conversely, misconduct by these individuals may also constitute a criminal offense, punishable under the Civil and Commercial Code of Thailand. Specifically, the Act Determining Offenses Relating to Registered Partnership, Limited Partnership, Limited Company, Association, and Foundation B.E. 2499 (referred to as "the Act") outlines these legal consequences.
Beyond the Civil and Commercial Code, which establishes civil liability for partnerships, shareholders, and directors, the aforementioned Act was enacted to ensure that business entities and their owners adhere strictly to Thai law. This includes Thai Company Limited and other business entities in Thailand, all of which are regulated by this comprehensive legal framework. Should an individual, tasked with managing or overseeing the operations of a Thai business entity, commit to or consent in any of the following unauthorized actions:
In response to the increasing incidents of legal entities violating the law, the Thai government, via the National Legislative Assembly, enacted the Act on the Amendment to Legal Provisions Related to Criminal Liability of Representatives of Legal Entities B.E. 2560 (2017), commonly referred to as “the Act.” This significant legislation abolished the presumption of strict liability that was previously embedded in 76 distinct laws, introducing in its place a new principle of non-presumption, which states:
"The director, manager, or individual responsible for overseeing business operations will be held legally accountable for any offense committed by the company if it can be demonstrated that the offense was a direct result of their instructions or actions. Similarly, if these individuals had an obligation to issue instructions or take measures to prevent an offense and failed to do so, leading to the company committing an offense, they will be equally liable."
The 76 statutes impacted by this legislative change encompass, among others, the Revenue Code, the Act Prescribing Offenses Relating to Private and Public Companies, the Consumer Protection Act, the Telecommunications Act, and the Anti-Money Laundering Act.
With the enactment of this new Act, directors are no longer automatically presumed liable under the strict liability presumption. This means directors are not obligated to prove their non-involvement or lack of conspiracy in offenses committed by their company—a principle previously known as 'guilty by presumption.' The responsibility now shifts to the public prosecutor or the complainant to establish that the director's direct instructions, actions, or failures to act were the cause of the company's legal violation, embodying a 'guilty by action or omission' approach.
With the enactment of this new Act, directors are no longer automatically presumed liable under the strict liability presumption. This means directors are not obligated to prove their non-involvement or lack of conspiracy in offenses committed by their company—a principle previously known as 'guilty by presumption.' The responsibility now shifts to the public prosecutor or the complainant to establish that the director's direct instructions, actions, or failures to act were the cause of the company's legal violation, embodying a 'guilty by action or omission' approach.
If a director acts unlawfully on behalf of the company, they will be individually charged with a criminal offense under the specified Act. Furthermore, should another director, who has acted in good faith, be suspected of involvement, they too may face charges.
Juslaws&Consult possesses extensive expertise in navigating the complexities of cases involving corporate governance and disputes. We are well-equipped to guide you through every necessary step, whether you seek advice on an ongoing issue or require assistance with setting up and managing a Thai Company or Business Entity in compliance with local laws. We understand the sensitivity of disputes between investors, shareholders, or directors, particularly given their partnership in business. For situations involving significant investments, where dissolution could jeopardize future profits, we advocate for mediation and settlement, taking into account the nuanced interpersonal dynamics at play.
However, should a dispute escalate to a point where adversarial action is unavoidable, our firm is prepared to assert or defend your position using all relevant facts, evidence, and applicable laws. Our commitment is to secure a resolution that is both favorable and substantial for our clients.
